FERMA thought paper highlights the links between its work and the priorities of the French Presidency in three key areas : Economic recovery (systemic risks and risk transfer, including captives) Digital issues (cyber risks and cyber insurance) Ecological transition (sustainability and insurability) For each of these categories, FERMA presents the challenges faced by European businesses, explains how risk management contributes to the ambitions of the French Presidency and asks European policymakers for specific measures during this period.

1. 21
COUNTRIES
5000
RISK MANAGERS
IN EUROPE
22
MEMBER
ASSOCIATIONS
45+
YEARS
As the single
recognised voice
of European
risk managers
Contribution to the
French Presidency agenda
A more sovereign Europe
January 2022

2. 02

3. 03
Come from a large
organisation
80%
Present to the board
or top management
Assess risks that could affect
the relevance and viability of
the organisation’s strategy
and objectives
74%
Perform insurance
management activities
67%
68%
Are in the industrial
sector
Make use of innovative
technologies
54%
86%
FERMA STRIVES FOR A WORLD WHERE
RISK MANAGEMENT IS EMBEDDED IN
THE BUSINESS MODEL AND CULTURE OF
ORGANISATIONS.
As the representative body for the risk profession at European
level, FERMA takes an active interest in the implications of the
sovereignty agenda and looks forward to engaging with the
French Presidency at the helm of the Council of the EU during
the first half of 2022.
Europe’s strategic autonomy and ability to defend our values
and interests rest squarely on the strength of its businesses
and communities. As risk managers, our role is to coordinate
awareness and action across corporate functions so that
organisations are more resilient whatever threats they face.
We wish to support EU policy makers to respond to the future
with confidence and support the transformation and resilience
of Europe’s economy.
PROFILE OF EUROPEAN
RISK MANAGERS
FERMA European Risk Manager Report 2020 [SOURCE]

4. 04
France has put the objective of further enhancing Europe’s
strategic autonomy and sovereignty at the heart of its work for
the next six months.
Launched in 2017, this agenda for a more sovereign Europe
identifies certain policy areas as strategic priorities to help re-
assert Europe’s role in global order while defending its values
and interests.The thinking in terms of ‘EU strategic autonomy’
has been accelerated by the pandemic and its consequences
for the economy and international trade.
In this short paper, FERMA describes the contribution of
enterprise risk management to the French EU Presidency
agenda for strategic autonomy for the European Union.
FERMA speaks on behalf of an international network of 22
risk management associations in 21 European countries,
representing about 5,000 professional risk managers.
The risk management perspective on the sovereignty agenda
For risk managers, the agenda of sovereignty directly impacts
the risks and opportunities facing their organisations.This
means that risk management as a strategic function can help
shape the tactical alignment of European enterprises to the
goal of sovereignty. It does this in two ways.
1. Riskmanagementhelpsincreasetheresilienceofbusinesses
to shocks.
2. Risk managers support their enterprises taking risks to
innovate, attract talent and build shareholder value.
Risk managers are the eyes and the ears of European
enterprise, since they are always scanning the horizon to
anticipate ‘megatrends’ that will impact their organisations.This
fundamental aspect of risk management informs the priorities
for FERMA’s advocacy work by identifying the areas of major
strategic importance for European businesses.
INTRODUCTION
Key issues for enterprise risk managers
The crisis created by the pandemic has clearly intensified
the use of horizon scanning and strategic foresight as ways
of building resilience and sustainability as mentioned by the
French Presidency in its programme.
Key issues for European risk managers today include:
• Economic recovery (systemic risks and risk transfer)
• Digital issues (cyber risks)
• Ecological transition (sustainability and insurability)
At Eiffage, jointly with the Group’s purchasing department, we have
pursued a solution to secure the supply ofmasks forouremployees
thereby reducing the risk of over-dependence on suppliers
outside the European Union. We had the opportunity to develop
a partnership with a French manufacturer for the production in
France of masks, in particular FFP2 masks. For these masks 67%
of the raw materials come from France and the remaining 33%
are sourced from the rest of Europe. The production line is fully
operational and produces 187,000 masks every day.
François Malan
Chief Risk and Compliance Officer, Eiffage, France
Risk management and resilence
Resilience reduces vulnerability to uncertainty and change. It
allows European organisations to determine their own course,
and so contribute to the strategic autonomy and sovereignty
of the EU. Enterprise risk management is a proven way of
strengthening resilience and enhancing opportunities.

5. 05
“ The French Presidency will give high importance to enhancing
the EU’s capacity to manage and boost its resilience to crises by
improving its preparedness, response capacities and by drawing
lessons from the response to the pandemic. ” [SOURCE]
STATE OF PLAY AND CHALLENGES
European businesses face an evolving risk landscape where
extreme risks such as the pandemic are growing in frequency
and potential severity. When it comes to mitigating such
risks, the private insurance market does not provide sufficient
financial protection for European enterprises.
The pandemic also hit corporates during a hard insurance
market, which is characterised by higher premiums and less
coverage. Looking to the mid- and longer- term, European
businesses are wary of certain risks being deemed “uninsurable”
by the private insurance market.
One favoured alternative to commercial insurance is captive
(re)insurance. Captives are an efficient risk management tool
for businesses and are also a part of a vibrant and competitive
European insurance market. Making the EU more attractive
for captives would contribute to reinforcing the resilience of
the European economy by giving companies more opportunity
to take risk in a structured way, mitigate market cycles and
improve approaches to risk.
ECONOMIC RECOVERY
We ask policy-makers to
Aim for a final text on Solvency 2 that would put the regulatory
requirements for captives on a basis that is truly proportional to
theirrisk-profile. Captives should be designated as low-risk profile
undertakings by default.This would grant European enterprises
more risk management options and so reduce volatility.
What is a captive ?
A captive is an entity set up and owned by the corporate group
to insure or reinsure certain risks of its risks for which the market
does not provide sufficient capacity or the price is not economic.
OUR CONTRIBUTION
FERMA Perspectives : Captives in a Post-BEPS World
Explains how multinational organisations can use captives
effectively fortheirrisk management programme in a modern
regulatory environment.
https://www.ferma.eu/publication/ferma-publishes-guideline...
To what extent do you agree with ‘there is not an insurance
product available that provides me with the needed coverage
against pandemic/large risks’?
FERMA’s COVID-19 Survey Report [SOURCE]
Strongly disagree
Disagree
Agree
Strongly agree
Undecided
10%
2%
40%
36%
14%

6. 06
OUR CONTRIBUTION
• While the scale and speed of the pandemic crisis was largely
unforeseen, large enterprises generally had preparations
and processes in place that helped them respond, thanks
in part to work by risk professionals.
• Between one-quarter and one-third of FERMA members use
or manage captive (re)insurance entities to cover certain
insurable risks of their operations.
• FERMA’s European Risk Manager Report in 2020, found that
43% of risk managers were already considering the captive
option, compared to 15% in 2018. [SOURCE] We expect this
figure to grow in our 2022 survey.
Did your organisation already have preventive measures in place
before the outbreak of COVID-19 ?
With the insurance market hardening further, 2022 will be
extremely challenging for corporate insurance buyers. A growing
number of enterprises might find much less value in transferring
some of their exposures to the private insurance market and
decide that it’s time to self-insure, set up new captives or extend
the use of existing captives.
Laurent Nihoul
Head of Group Insurances and Group Operational Risk
Management, ArcelorMittal, Luxembourg
ECONOMIC RECOVERY
NO
41%
YES
59%
FERMA European Risk Manager Survey 2020 [SOURCE]
FERMA’s COVID-19 Survey Report [SOURCE]
2018 2020
15%
43%
Percentage of organisations considering making use
of a captive (already existing or creating, 2018-2020)

7. 07
“ Enhancing cybersecurity will be a core focus for the French
Presidency. “ [SOURCE]
STATE OF PLAY AND CHALLENGES
The pandemic has speeded the digital transition of Europe.This
acceleration has also opened new – and arguably emphasised
existing – vulnerabilities. One of these is the concentration of
digital power in the hands of a few companies and countries.
Effective cyber risk management is essential for enterprises
to develop their digital platforms and reduce the likelihood
and severity of damage from cyber-attacks. Risk managers are
also aware of the exposure from dependence on single source
suppliers.
An important element in managing digital risks is cyber
insurance, which beyond providing risk transfer also guides
companies in their prevention and security measures. FERMA
Members have cybersecurity at the the top of their agendas,
however they are concerned that there is a shortage of
appropriate cyber insurance on the market.
Furthermore, non-European entities determine many of the
conventions in the realm of cyber security.This is important
for risk managers in terms of their ability to identify, evaluate,
mitigate and transfer risks.
OUR CONTRIBUTION
FERMA proposes a cyber risk governance model to help
organisations manage their exposure to cyber risk
FERMA Perspectives: At the Junction of Corporate
Governance and Cybersecurity, written jointly with ECIIA.
https://www.ferma.eu/publication/ferma-perspectives-n...
FERMA is helping organisations understand their cyber
risks and financially mitigate cyber risk
BIPAR, FERMA and Insurance Europe in association with
Aon and Marsh have published the “Preparing for cyber
insurance”
https://www.ferma.eu/publication/preparing-for-cyber-i...
FERMA is working on a project to shed light upon cyber
insurance (Project LUCY) at European-level
AMRAE, Lumière sur la Cyberassurance, édition 2021
https://www.amrae.fr/bibliotheque-de-amrae?ref_id=3214&...
DIGITAL ISSUES
We ask policy-makers to
• Promote corporate governance frameworks in cybersecurity
matters.
• Work towards common European maturity-levels in terms of
organisational cyberrisk management, as well as standards or
norms in cyber that are security and risk management driven.
• Help to improve European companies access to information
about cyber insurance and the impact of cyber attacks on
companies, notably in the context of discussions on Open
Finance.
Unfortunately for European enterprises, there is very little
consistent, official information available on cyber attacks. What
is the economic impact? Nobody knows. How many companies
suffer attacks? Nobody knows. This puts the corporate buyer of
cyber insurance at a disadvantage that the Lucy project intends
to redress.
Philippe Cotelle
Head of Cyber Insurance & Risk Management. Airbus Defence &
Space, France

8. 08
“ Accelerating the transition to a decarbonised economy to
become climate neutral by 2050 is an important goal of the French
Presidency. “ [SOURCE]
STATE OF PLAY AND CHALLENGES
For some time now both the frequency and severity of extreme
weather events and natural catastrophes has been rising. This
trend preoccupies risk managers as they seek risk transfer
options to mitigate the impact of such events.
In this area, FERMA draws attention to the growing concern
among risk and insurance managers about a protection
gap, which is where some enterprises find themselves with
insufficient financial protection against climate-related losses.
According to a recent survey conducted by the French risk
management association, over 60% of risk managers are
concerned that certain business activities or locations will
become un-insurable [SOURCE].
The concern about lack of options for risk transfer for risks
related to the transition is growing among risk managers.
FERMA is very supportive of the work of EIOPA on the natural
catastrophe protection gap dashboard. More information in
this area is a vital step towards addressing the shortcomings of
the market and to working on a possible solution, be it a public
private partnership or otherwise.
OUR CONTRIBUTION
• One of the key contributions by risk management in terms of
the ecological transition is that it helps prepare businesses
for worst-case scenarios by guiding prevention and loss
mitigation measures. See FERMA’s Sustainability guide for
more information. [SOURCE]
• FERMA is also working with its Members this year to
develop a position on the insurance market strategy for
the transition, with a view to making recommendations for
policy.
ECOLOGICAL TRANSITION
We ask policy-makers to
Focus on the important issues of the insurance protection gap for
natural catastrophes, and the trend in the commercial insurance
market of risks being deemed ‘uninsurable’. Otherwise, EU citizens
and businesses could be left with no risk transfer mechanism or
financial protection for certain substantial losses.
The economic and insured losses from natural catastrophes in
2020 and 2021 (EUR Billion, 2021 prices) [SOURCE]
Right now despite many companies making considerable
investments in various sustainability initiatives or
decorbanisation efforts, we are not seeing this being reflected in
a lower insurance premium. This is important because many big
industrial companies are themselves pursuing goals that help
the transition away from carbon. We need a lot of support from
banks and insurers to smooth this transition.”
Mario Ramirez Ortuzar
Risks and Assets Manager, Exolum, Spain
Economic
Losses
Insured
Losses
2020 2021
171
211
76
89

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